All three presidential candidates back some mix of carbon regulation and renewable energy market stimulation. The detailed proposals that have emerged, however, can charitably be called incoherent. Hillary Clinton, as SunEdison’s Jigar Shah noted recently, has commented approvingly on the success of Germany’s feed-in tariff in spurring job creation and building a renewables market. So, taking this thought to its illogical extreme, let’s imagine Hillary wins in November and starts pushing for a national feed-in tariff. This possible reality begs the question, ‘are feed-in tariffs rational?’ Feed-in tariffs are designed to push renewables into electricity markets. A feed-in tariff generates consumer demand for installed systems by setting the renewable energy price at some level above the market rate. Instead of reducing upfront capital costs for the consumer, a feed-in tariff shortens the payback period on an installed system. The tariffs are typically set on a declining price schedule that reflects the effect of economies of scale on renewable technologies. Rates are locked in over the lifetime of a system from its installation date – typically 20 to 30 years. This both promotes certainty and reduces risk. Utilities are obligated to buy excess power generated from these systems at the above market rate. However, since feed-in tariffs are revenue-neutral by design, utilities are allowed to spread the marginal cost of the subsidy over their customer base. Thus, some individuals receive income from having installed systems, while others are charged a nominal monthly fee for the privilege of using green electricity. Let’s take a closer look at that declining schedule. Germany’s feed-in tariff will contribute to a 107.33 percent increase in installed PV capacity from 1.05 GW in 2006 to 2.177 in 2010, according to Prometheus Institute President Travis Bradford’s base case projection.

During that period, the average module price will decline 46.05 percent from €2.41 per watt to €1.30 per watt. The feed-in tariff for ground mounted PV systems is set to decline 23.5 percent from €0.40/kWh to €0.306/kWh, while the tariff for rooftop systems less than 30 kW will drop only 18.53 percent, from €0.518/kWh to €0.422/kWh. Averages prices are declining at a rate faster than the scheduled 1.5 percent tariff reduction. While the relationship is not expected to be one-to-one, this growing differential may have some long-term negative effects. Subsidies create market distortions by artificially manipulating price signals. The first year of Germany’s feed-in tariff sent a large number of PV producers into the market, all angling to fill the growing demand for PV. The entry rush constrained polysilicon supply, sending up market prices and appearing to prove out the feed-in tariff’s necessity. Two things happened in response to this – research and development funds were diverted to thin film PV and a host of new polysilicon producers started building factories in a bid to satisfy the global feedstock demand. Thin film PV is a low cost, low efficiency substitute for silicon-based PV, and the supply crunch provided an opportunity for this technology to gain a market foothold where one would have not existed otherwise. The nail in the feed-in tariff’s coffin is the coming expansion of polysilicon supply. Consumers will respond to dropping technology prices and comparatively high tariff rates by installing more capacity. That installed capacity expands and the price paid for that capacity declines while the German government pays increasingly higher subsidies is perverse. Perhaps even more odd is the privileging of PV over other, more appropriate forms of renewable energy, like wind power. Germany’s open expanses are more wind-whipped than sun-drenched. Last fall the German government made noise about recalculating the scheduled tariff decrease, sending equity researchers into fits, and forcing them to revise their demand models downwards. In other words, seven years after the program started, PV capacity may still largely be responsive to the tariff price signals. This is not a good for sign for what many had hoped would be an independently moving market in a few years’ time. This also contravenes the certainty and risk-reduction that long-term policies aim to establish. Other problems may also surface, like the lack of interconnection standards or ongoing utility payment and ratemaking schemes that have yet to be fully resolved. Of course, Germany only has four major utility companies that will need to deal with these problems. The U.S. has more than 3,000. A U.S. policy aimed at increasing renewables capacity that also establishes a sustainable market with clear price signals may require taking an opposite approach. Instead of pushing renewables onto the market, pulling them through an RPS-based quota system will build a strong, technology-agnostic renewables base backed by renewable energy certificate trading. This gets at the low-hanging fruit first, giving time for high-priced technologies like PV to reach market competitive prices without market distortion. In the mean time, we'll maintain our watch for the killer amp.

Scottish First Minister Alex Salmond announced a $20 million prize for commercial-scale ocean power projects today at the National Geographic headquarters in Washington, D.C. The prize is aimed at building Scotland's ocean power generation capacity by attracting commercially viable technologies to Scottish waters. But how much capacity can $20 million really buy? PelamisWave, a Scottish company, is already at work installing a 4 MW commercial plant at the European Marine Energy Centre in Orkney at a cost of around $20 million. The EMEC - part commercial plant, part testing center, was established in 2004 to "help the evolution of marine energy devices from the prototype stage into the commercial market place." While details for the project were left, it is almost certain the $20 million will go for another Pelamis project. Pelamis is also at work developing a 2.25 MW plant in Portugal, where it received substantial subsidies and promise of a feed-in tariff. Earlier this year Pelamis business development manager Max Carcas criticized the UK for not doing enough to promote ocean power in his home country. Carcas said "it was not our choice where we put the technology, it was the customer's. The customer has got to get a return which is competitive. The UK talks a good game, but the action to deliver has been lacking." Salmond's plan may likely be a response to this criticism. I tend to agree with Scottish Lib Dem leader Nicol Stephen, who said "Marine renewable technology needs sustained investment, not recycled gimmicks." Smack down!

I talked a while ago about the elusiveness of the "Killer Amp," and ended, perhaps in a cop out, saying there isn't one for greentech, only the White House and Congress have the power to truly invigorate this market through policy, not a compelling new application at the consumer end. But maybe I was going about this the wrong way. Looking for analogies to the telecommunications industry, where killer apps grow on trees and ripen for picking every year before the first frost, perhaps missed the point. Telecom and energy markets aren't the same, and never will be. Utilities have never really responded to a market pull from new applications - there are no energy market equivalents to the iphone, video-on-demand, or even email. There is, in the end, only economics. So I gave up looking. Time passed. I did some reading, and got an idea. Two ideas, really. The first came via the Boston Globe, which recently summarized a range of proposals around reducing one's own personal carbon footprint - personal cap-and-trade or cap-and-share, among others. You get a carbon allowance from the government, and if you use less, thanks to your commitment to the bus and bike, you can sell your excess allotment on a regulated market to the Hummer-drivers in the 'burbs. The killer amp, in this scenario, is you, the consumer, now made aware of your energy choices with real specificity and consquences, and the ability to profit or lose individually in a market that ideally could be quite efficient. The second idea came from a group of futurists, funny little human curiosities who makes careers, or blogs, out of preposterous speculations in fine language. They talk of saving the planet through various methods of willed human extinction. You die, your children die, and that's it. The planet lives on without us, and the better for it.Really, that's a plan put forward by a logo-challenged organization called VHEMT that envisions a rather pleasant, voluntary extinction of the human species. As the population ebbs, kids grow past adolescence, our planet will begin to heave a global sigh of relief, recognizing this grand gesture as one meant for her. That last generation will walk among an Earth slowly retreating towards Eden, then take leave once and for all, with a brief apology for all the nuclear waste, PCBs, dammed rivers, torched rainforests, and acidified oceans we have left for her to clean up and make whole again. Having sat through Children of Men, which assumes such a global condition (minus the voluntary part), it's hard to grasp the pleasance of this. The movie was cast in such a sepulchral grey and suffused with such violence, I left the theater feeling covered in ash and a bit of blood. Thinking of VHEMT, the idea that all of humanity would go in for this to save a Mother Earth murdered by a wee number of hyperconsumers in America seems, to keep the Brit-tone going, daft. Nick Bostrom, of Oxford University has a better idea. Whole Brain Emulation. "Uploading" one's self into a vast mother computer that would not only hold us in an eternally virtualized state but allow us to continue to develop, take a next evolutionary step free of mortal limitations. The idea has been around for quite a while and is a darling of sci-fi writers, but with computing power increasing at the pace it does, the idea that we can in a computer system replicate/emulate a brain, i.e., a human "life," is approaching plausibility and has some of these same the killer amp is you folks thinking it's a way to end the human race's continued savaging of the environment while preserving our intellect. Think, Second Life, with better graphics, forever. Right, right, someone has to keep the power on. That's easy, the robots will. Someone has to fix the computers when they fail. Robots again. But who repairs the robots when they fail? Well, you just create a class of robots that come with whole brain emulation of the original robot repairpeople. Maybe it is plausible, just needs some time to season, get the price of terabyte RAM down far enough, million-core processors into production, and robots. Thinking it through, this is a game everyone has to play. You would need some special robots to hunt down and kill the people who refuse to die or stop having babies. You'd need a real global, coordinated plan for that, and some convincing PR, considering this is motivated by planetary goodwill. But inevitably Will Smith would show up and fight those robots and reveal this was no grand plan to save the world at all. No, it was a plan hatched by a ruthless corporate megalomaniac who just wanted to sell more robots! Personal cap-and-trade. The Killer Amp. It's a safe start.

Speaking at WIREC today, President Bush announced his amazement with big nuts. "I was interested to see that Virgin Atlantic flew a 747 from London's Heathrow Airport to Amsterdam, fueled partly by coconuts and Brazilian babassu nut," Bush said, continuing "I've never seen a babassu nut, but it's amazing that it helped power an airplane the size of a 747." I'm not even making this up. The money quote and a moment of clarity, after the jump.

Speaking on a panel entitled "Current Trends and Issues: Renewable Energy", beloved BP CEO Tony Hayward finally came out in favor of green technology. Well, almost. Martin LaMonica reports Hayward said "even though clean tech is growing fast, we all need to be honest. The scale that the industry is working at today is not going to have much impact." Fellow panel member Energy Secretary Sam Bodman promptly turned a brighter shade of pink. As if that were possible. So, to recap, the CEO of a company that plans to spend $30 billion on oil recovery over the next six years while selling off its renewable energy business thinks greentech will never reach a scale large enough to impact world energy markets. Something about a self-fulfilling prophecy. Ben Stein would be proud.

A veritable who's who list of renewable energy and green technology leaders have descended on Washington, D.C. this week for the Washington International Renewable Energy Conference. The conference, co-sponsored by the U.S. Government and the American Council on Renewable Energy, promises to "address the benefits and costs of a major and rapid scale-up in the global deployment of renewable energy technology." But is WIREC's bark tougher than it's bite? Among the featured speakers are a host of Bush administration heavyweights, eager to display to the world their grasp of weighty renewable energy issues and their ongoing commitment to delivering a clean energy future. However, "grasp" and "commitment" are two words not usually associated with the Bush administration, especially when it comes to renewable energy. I'll combine the ITC with switchgrass to make biofuel.  After the jump, we consider whether someone forgot to invite the Democrats.

Cilion, a venture-backed ethanol startup, has fallen at the intersection of a vc and policy love triangle. The company, which was founded in May 2006, is backed by Vinod Khosla, Richard Branson, and Ron Burkle's Yucaipa Companies. That would be the same Yucaipa Companies where Bill Clinton is a senior advisor. In September 2006, Khosla, Branson, and Burkle appeared with Bill at the Clinton Global Initiative fund raiser, shortly after Cilion announced it had raised $160 million. Though Yucaipa claims it invested less than five percent of its equity in the ethanol company, this is still a substantial amount given the amount of cash Yucaipa has under management. And then there's Hillary. Her Senate office has been busy in upstate New York clearing the way for that area's nascent ethanol industry.